The paper then offers a policy proposal aimed at better utilization of the Strategic Petroleum Reserve, or SPR: Require oil companies to purchase the oil in the SPR, thereby releasing the large store of value locked in the little-used reserve to combat, through clean energy R&D, “a monumentally bigger energy threat—climate change.”

Just 3 members of the International Energy Agency (IEA)—the United States, New Zealand, and the Czech Republic—currently maintain government-only strategic stocks. Other members rely in whole or in part on industry participation. Establishing a public-private agency to run the US strategic stockholding, as many IEA members have done, will strengthen coordination of commercial and strategic stocks and transport infrastructure at a time of major shifts in domestic crude oil flows. Industry ownership and maintenance of the SPR will preempt the possibility of its dissipation as a federal budget stopgap and its deterioration as a result of inadequate public operating funds.

Oil companies will purchase the existing 695 million barrel SPR with a fee on US production and imports that will substantially correct the prevailing market price—a price that falsely sets increasingly severe carbon costs to zero. The money will go into a dedicated clean energy R&D fund to carry out the Mission Innovation commitment made by the United States at COP 21 last November. A dedicated fund will increase the certainty of public investment in this crucial commitment and thereby its prospects for success.

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Resources for the Future (RFF) is an independent, nonpartisan organization based in Washington, DC, that conducts rigorous economic research and analysis to improve environmental and natural resource policy.